September 2019 Lumber & Commodity Report
by Don Magruder, CEO of RoMac Building Supply
The RoMac Building Supply Wood Commodity Index (Index) for September increased 8.4% to $312 per thousand on the strength of dimensional spruce and demand created in the sheathings market from Hurricane Dorian. Continued mill curtailments in Canadian lumber due to decreased demand are fueling the increases as mills are trying to firm up this sagging market. Hurricane Dorian spurred interest in the sheathings market as most of the United States East Coast was at one time or another in its bullseye. Producers of sheathing products understand that the most active part of hurricane season is upon us.
Spruce studs increased $10 to $22 per thousand depending on the width and length. Specialty studs garnered a higher price as mill production made those sizes less available. Dimensional 2×4 spruce increased $24 to $60 per thousand and the larger price increases favored the longer lengths. 2×6 dimensional spruce was up $24 to $39 per thousand and mirrored the activity in narrow width spruce. Some bleed over in narrow width pine products is occurring as builders search for more value. Wide width pine pricing was not as fortunate from a price increase aspect. 2×12 #2 pine plunged $70-$75 per thousand as mills searched for buyers.
Although the sheathing markets increased with the threat of Hurricane Dorian, it wasn’t to the level of similar storms in the past. With the increases over the last 30 days, both CDX and OSB sheathing prices are still about 30% percent down from the prior year. Unless there are continued hurricane threats, or a significant hurricane strike in the United States, the prospect for continued price appreciation in the later fall months will dim.
Builders are in the odd position of protecting against higher prices short-term while having the ability to adjust quotes long-term. There is a chance pricing by year end could be down and pricing from today will be too much to win business. My advice is to watch the weather; check with your suppliers; and, don’t use permanent ink on your quotes.
Don Magruder is the Chief Executive Officer of RoMac Building Supply in Central Florida (romacfl.com) and he is a former President of the Southeast Mississippi Home Builders Association, and past Associate Vice President of the Home Builders Association of Lake County. To contact Magruder, email him at firstname.lastname@example.org.